GLOBALISATION Flashcards
The reasons for growth of TNCs
MOTIVE: controlling + minimising their costs + increasing revenues by expanding markets MEANS: Banking + free flow of capital MOBILITY: Faster + cheaper transport •Rapid communication systems •New production tech, ‘Just In time’ •Global production networks
How to measure globalisation: KOF Index
Measures 3 dimensions:
•Economic globalisation: Characterised as long distance flow of goods
•Political globalisation: Characterised by a diffusion of gov policies
•Social globalisation: Expressed as spread of ideas, info + people
Effects of TNCs on host countries - POSITIVE
- They are vital sources of FDI - in UK, 2007, created 50,000 jobs
- TNCs stimulate multiplier effect. Company may require locally produced components. Meanwhile, incr wealth + disposable incomes will generate domestic demand, stimulating growth
- TNCs can also increase local skills. In some cases, this may help to offset large-scale unemployment caused by the mechanism of agric
- They are often responsible for the transfer of tech such as JIT
- They May construct or improve infrastructure such as roads
Effects of TNCs on host country: NEGATIVE
- Can make others go out of business
- TNCs often face negative attitudes from local authorities, residents and environmentalists.
- Many of the jobs offered are low skilled. Managerial positions are often filled by people who have moved with the TNC, producing little prospects for locals to develop within their jobs
- Some TNCs use cheap labour
How to measure globalisation: AT KEARNEY INDEX
Examines the international trends that reveal whether the world’s leading nations are becoming more or less globalised
•GI focuses on:
-Economic integration - FDI/Trade
•Technology connectivity-membership of IGOs
•Political engagement-Tourism, international phone calls
Why is China a ‘winner’ of globalisation?
POLITICAL STABILTY: communist gov has been in place since 1949
EMERGING MARKET: wealth trickles down via multiplier effect
STABLE CURRENCY: exchange rate is good
CHEAP FREIGHT: low prices enable TNCs to outsource manufacturing to far off places and make good money
TAX INCENTIVES: China has set up Special economic zones-where businesses can import raw materials without paying tariffs or duties
POSITIVE IMAGE: 2008 olympics to reimage itself
Types of globalisation
ECONOMIC: ICT allows managers to keep in touch more easily. Each time barcode is scanned-an adjustment is made with suppliers
SOCIAL: ICT supports migration+cultural traits are adopted
POLITICAL: social networks used to raise awareness of issues. Greenpeace
WTO
To ensure that flows are smoothly, predictability and free BENEFITS: •The system helps promote peace •freer Trade cuts cost of living •it provides more choice of products •Trade raises income •Trade stimulates economic growth
Effects of globalisation
DIV OF LABOUR CHANGED FOOD SUPPLY DAMAGE TO ENVIRON ANTI-GLOB PROTESTS LESS JOB SECURITY
What are the main causes of globalisation?
- Internet
- Containerisation
- WTO-greater movement of people
- Schengen agreement -EU
- Free movement of capital with online banking
Foreign direct investment
FDI: controlling ownership in a business enterprise in one country by a company or org based in another country Govs can encourage FDI: •Low Rates of corporation tax •Tax holidays •Preferential tariffs •Free or subsidised land •Fast track visas
Reasons for the global shift
- Transport revolution
- Neo-liberalism - move towards free trade, especially within trade blocs
- financial deregulation - fiscal policies which permitted freer movements
- enhanced role of state-gov policies to attract FDI
ADVANTAGES OF GLOBAL SHIFT IN MEDC
- Cheaper imports of labour intensive products can keep living costs down
- growth in LEDCs May lead to a demand for exports from MEDCs
- Promotion of labour, market flexibility + efficiency, greater labour mobility
- greater industrial efficiency should lead to development of new tech, FDI
- Loss of industries can lead to improved environmental quality
ADVANTAGES OF GLOBAL SHIFT IN NICS AND LEDCs
- Higher exports - generated income promotes expert led growth thus promoting investment - potentially leads to multiplier effect
- Can trickle down to local areas with many highly paid jobs
- can lead to exposure to new tech, skills + productivity
- employment in labour manufacturing spreads wealth, and addresses development gap
Disadvantages of global shift
- Rising job exports leads to inevitable job losses
- big gap develops between skilled and unskilled
- job losses can lead to deindustrialisation
